If reports are to be believed, the government is ready with the new version of international trade policy – FTP 2020-25, which is expected to have improved import/export policies and more incentives for the businesses. But what are businesses expecting from the new FTP? Read this post to find out.

The international trade policy for 2015-20 is known as one of the biggest breakthroughs in the history of international trade in India. The validity of the current FTP will cease on 31^st March 2020. If reports are to be believed, the Commerce Ministry is all-set with the FTP 2020-25 and is expected to release the same in October/November 2019.

The new set of international trade policies are expected to bring higher incentives for the importers and exporters while reducing the infrastructural inefficiencies of the current policies. Here is a list of some of the top expectations of Indian import/export businesses from the new international trade policy-

1. Reduced Import Tariffs

While the government has taken measures for lowering import tariffs, several product and service categories struggle with higher tariffs. Higher tariffs result in an appreciation of the exchange rate for India. Moreover, when import tariffs are higher, businesses often resort to illegal ways of importing and exporting products and services.

Higher tariffs are known to be the biggest contributors to the thriving smuggling industry in the country. In a way, this also impacts the reputation of India in the foreign markets. Lower tariffs will encourage businesses to import products and services from foreign countries and also help India develop a mutually-benefitting relationship with other countries.

2. Improved Trade Infrastructure

One of the biggest challenges for Indian exporters is the lack of trade infrastructure. For instance, there is no adequate storage space at most of the busiest airports and seaports in India. Moreover, a lot of places in the country still do not have adequate sea or air transport facilities.

But it is important to note that the government has built more than 30 new airports in the last four years. Expansion activities are also underway at most major seaports like Kandla, Cochin, Mumbai, and Port Blair. Policies with regards to improved trade infrastructure would surely be appreciated by Indian importers and exporters.

3. Changes in Export Incentives

MEIS and SEIS were two of the biggest incentive schemes for Indian exporters announced in FTP 2015-20. However, these schemes have been recently challenged by the USA under the World Trade Organization’s dispute resolution mechanism.

While exporters can take benefit of these schemes up to 31^st December 2019, new policies will replace them from 2020. Under the new policy, the incentive mechanism will have some major changes to meet global trade policies better.

4. R&D Based Incentives

A large number of Indian exporters are expecting the new Foreign Trade Policy to come up with incentives that are based on how much a business invests in research and development. Businesses are also expecting provisions for indirect tax refunds in the oil and power sector.

As the engineering sector is one of the biggest contributors to employment in the country, the new trade policy should have measures for promoting the same. Many exporters also believe that the Commerce Ministry is yet to take full advantage of agri-exports, and the sector holds great potential. Policies promoting this sector will also be welcomed by Indian agribusinesses.

Contribution of Import/Export in Indian Economy

Significant changes are required in the current state of import/export in the country if India is to achieve the ambitious target of being a $5 trillion economy by 2024. The Commerce Ministry has mentioned that suggestions and inputs have been taken from stakeholders for creating the new trade policy.

While it is not possible for the trade policy to satisfy every importer and exporter, meeting the top expectations like the ones discussed in this post is sure to encourage businesses and can improve the prospects of import and export in the country.